Over the past year, the average house price has skyrocketed and is now at the highest they've ever been. According to Forbes, this trend will continue through 2022. But, the price increase isn't just happening in the housing market. It's happening just about everywhere you look. From commodities and building materials to food in supermarkets, demand far outweighs supply at this moment.
At first glance, the connection between the commodities market and house prices may not be obvious, but if you look a little deeper, you can see how they have such a significant effect on each other.
Lumber, Concrete, and Brick–Demand is High, Supply is Short
You can't build a house without the proper materials, and right now, just about every material that builders need is in short supply, with costs soaring. At their highest in mid-May of 2021, lumber prices were at an all-time high of $1,670.50 per thousand board feet. This price is six times higher than in April of 2020. In fact, in a recent article, the National Association of Home Builders reported that a new wave of rising lumber prices added more than $18,600 to the price of a new home.
Likewise, a concrete shortage is happening right now, forcing construction projects to delay across the country. For many, it's just impossible to get their hands on the materials they need because they aren't available.
Demand for brick is so high that brick companies cannot manufacture them quickly enough. When brick supplies are available, the price continues to drive higher and higher.
Delays and Shortages Don't Stop Public Demand
Demand for new homes and construction on existing ones hasn't stopped in the wake of all these delays and shortages. Instead, the extra cost passes onto the home buyer–who, as of now, is willing and able to pay.
The competition for new homes is a major factor driving commodity and home prices. If you've spent any time searching for a new home over the last 12-18 months, you've noticed that houses aren't sitting on the market for very long, and many of them are selling for prices far above asking. For example, in Austin, Texas, the median listing home price has risen 24.5% year-over-year.
Is Relief Coming?
As supply chain issues continue to haunt manufacturing, experts are unsure when relief will come. Many believe that it may not happen in 2022.
But, that doesn't mean there aren't organizations out there trying to fix these issues. The National Association of Home Builders (NAHB) is currently working with the White House, Congress, and lumber producers to resolve current supply chain disruptions and increase material production. The organization and its members are working tirelessly to find solutions for creating a lasting and stable supply of lumber and building materials at reasonable prices.
You can learn more about the steps they’re taking in this NAHB Now article.
Until a leveling-off happens, potential home buyers would do well to stay patient and remember that buying or building a home is a long-term investment. Throughout American history, the housing market has always been one of ups and downs, but it remains one of the best investments over a lifetime that anyone can make.
Home Construction Experts in Austin, Texas
If you have questions, there is no one better to reach out to than custom home builders. Nate Carty and his team at Carty Custom Builders live and breathe home construction. They are members of the NAHB, the Texas Association of Builders, and the Home Builders Association of Greater Austin.
If you'd like to learn more, you can contact Carty Custom Builders through their website.
